Written by: Brad Steele, J.D.
Under the U.S. American Rescue Plan (ARP), clubs must now pay COBRA premiums for employees involuntarily terminated or who lost health insurance due to a reduction in hours. The good news is clubs are entitled to a 100 percent tax credit for these payments. The bad news is there are notices that must be sent to current and former employees explaining this benefit. These notices must be provided by May 31, 2021. Click here for the model notices.
- The Model General Notice and COBRA Continuation Coverage Election Notice is for those employees who may become eligible for the subsidy.
- The Model Notice in Connection with Extended Election Period is for those who are still in their 18-month COBRA coverage period – even if they declined it or accepted it and later dropped coverage.
- The Model Notice of Expiration of Premium Assistance is to be provided 15-45 days before the subsidy ends.
Club leaders should work with their plan administrators to ensure these COBRA Premium Subsidy Notices are issued to your current and former staffers within the time allotted.
A Quick Refresher on the COBRA Subsidy: April 1 – September 30, 2021
- Clubs must provide the subsidy to eligible employees.
- Eligible employees include:
a. Those who become entitled to COBRA 4/1-9/30,
b. those who are on COBRA and are still within their coverage period, and
c. those who did not elect COBRA or dropped it and are still within their coverage period.
- These employees will be given a new election period to take advantage of the subsidy.
- The subsidy expires September 30, when the employee’s coverage period ends or when the employee gets other coverage, whichever occurs first.
Though other aspects of the ARP may have a larger financial impact on your club, this COBRA benefit should not be forgotten.
Brad Steele, J.D. has 15 years of experience in the private club industry and is founder of Private Club Consultants (PCC), which provides in-depth legal and operational answers for private clubs in America.